This afternoon a number of consumer groups sent a letter in support of Senator Amy Klobuchar’s bill S.41, the Medicare Drug Price Negotiation Act of 2017. Consumers Union, Consumer Federation of America, Consumer Watchdog, Consumer Action, and U.S. PIRG all declared their support for allowing Medicare to negotiate lower drug prices with drug companies.
Senator Klobuchar remarked that “the fact that Medicare can’t negotiate for the best possible price on prescription drugs makes no sense. It’s a bad deal for our seniors and all taxpayers.” She also emphasized that Medicare, with 41 million seniors enrolled in the program, has incredible bargaining power to bargain with companies for reduced drug costs. Ten thousand seniors age into Medicare every day, and the government should have the right to act in their interests. The benefits of this reform would therefore not be limited to seniors, but indirectly help all Americans by leading to less expensive prescription drugs for everyone.
This bill would allow the Secretary of Health and Human Services to directly negotiate with drug companies for price discounts to the Medicare Prescription Drug Program. Passed in 2003, the program currently has a non-interference clause that specifically forbids Medicare from negotiating to get the best drug prices. The Veterans Administration, which does have the power to negotiate directly, pays much less than Medicare for prescription drugs.
Klobuchar’s bill attempts to solve a massive and rapidly growing problem. Over three-fourths of Americans aged 50 or older regularly take prescription drugs. Medicare Part D, the section of Medicare that covers prescription drugs, makes up a sixth of all Medicare spending. And drug costs have skyrocketed over the last few years. The premiums that seniors pay for prescription drug coverage under Medicare keep going up, and they will reach $846 by 2025. The federal government is paying more as well. Pharmacy benefit managers (PBMs) have failed to hold down costs, and drug companies have eagerly raised costs and been unable to stop extreme examples of price gouging.
Americans overwhelmingly support allowing the government to negotiate lower drug prices for Medicare beneficiaries. 83% of people favored it in a recent poll. Such a reform will help combat rising prescription drug costs, benefit everyone except a small group of price gouging companies, and save taxpayers money by reducing costs. While this bill is not a silver bullet, it is an excellent first step to fixing our broken prescription drug system, and it will lay the foundation for future reforms.